Thursday, October 28, 2010

But Goose Island, from Chicago, Illinois, is expanding into the New England market. Eventually. But, rather than burden their Chicago brewery with the output, they will use Redhook's brewery in Portsmouth, New Hampshire.

There's a few interesting things at play here:

- Goose Island, RedHook, Widmer, and Kona are all part of the Craft Brewers Alliance. What is the Craft Brewers Alliance? Well, it's a single, publicly traded, company. It's sort of like a co-op but the company's shareholders are not its breweries, but the public (including a significant portion owned by Anheuser-Busch). However, it acts as a purchaser of raw materials so that the breweries can lump orders together to get better pricing and availability. It also acts as distributor to take advantage of regional penetration by each of its brands. Its brands are typically distributed through Anheuser-Busch's network of distributors.

- Apparently, now the partnership also includes allowing partner breweries to brew at your facility. Provided each of these breweries has some excess capacity this allows easy introduction of participating brands into the region. If Goose Island wants to enter New England, it doesn't need to spend millions to build a facility, it can just brew there. It's not entirely clear whether this is a contract (RedHook, technically, brews Goose Island's recipes) or alternating proprietorship (Goose Island brews its own on RedHook's equipment) relationship. But, the fact is that there is very little risk in this arrangement.

- The beer will not immediately be sold in New England, but rather be destined back into the Midwest (probably to Eastern-Midwestern markets like Ohio). This gives Goose Island some time to figure out if the arrangement will work and to iron out the wrinkles.